RADIOSHACK CORPORATION

RADIOSHACK CORPORATION. RadioShack Corporation, with headquarters in Fort Worth, is a computer and electronics manufacturer and distributor that began as a family-owned and operated leather store in 1919. The Hinkley-Tandy Leather Company, founded in Fort Worth by David L. Tandy, grew into a nationwide chain of hobby and leathercraft outlets. Tandy's son, Charles David Tandy, is credited with a talent for marketing and expanding the family-owned business. Tandy entered the business at twelve, helping his father sell leather products, and later attended Texas Christian University. After working for a time at oil wildcatting, in real estate, and at the Leonard Brothers department store, he served in the Naval Supply Corps during World War II. After the war Tandy started a mail order business to sell tools and scraps of leather to army posts, schools, prisons, hospitals, and therapists. He eventually expanded into the hobby market—American children could now make leather moccasins and coin purses from Tandy kits—and developed subsidiary locations as direct sales and mail orders increased. The company incorporated as Tandy Corporation in 1960, when it began trading on the New York Stock Exchange. Tandy diversified into new and unrelated fields of enterprise by purchasing Radio Shack, an electronics firm with numerous outlets nationwide, in 1963. At the time, other divisions of the firm included Pier I Imports, Tandy Leather, American Handicrafts, Meribee Embroidery, and three leather goods manufacturers. Though Radio Shack was in financial trouble at the time, Tandy turned the Boston-based chain into a profitable endeavor after only two years. Only ten years later, two new Radio Shack outlets opened every working day, and by 1988 the number of store locations had grown to over 7,000. Tandy succeeded by cutting Radio Shack's inventory to only the most popular merchandise to maintain large profit margins, attracting customers with competitive prices and flashy advertising, and "institutionalizing entrepreneurship" by initiating employee incentive schemes that paid bonuses based on a percentage of store revenue. Where the company had first established exclusive contracts with manufacturers, more items were eventually designed and manufactured by associates or subdivisions of the firm to eliminate middlemen by dealing only in private label items. Tandy manufactured everything from wire to microchips. In 1955 Tandy sold off the family leather business to American Hide and Leather Company of Boston, only to reacquire control in 1959, and dispensed with other lines of business to deal exclusively in electronics. By 1963 Fort Worth's M&O Subway, originally named for Marvin and Obie Leonard of the Leonard Brothers Department Store, was renamed the Tandy Subway, and in 1977 Tandy opened a new Tandy Center complex on the site of the former department store. Charles Tandy died unexpectedly in 1978, and Philip North, a company director, took his place as interim chief executive officer. North, who had been Tandy's administrative assistant and childhood friend, used his knowledge of the founder's management style to guide the firm and actively consulted with Tandy's Distribution and Manufacturing Vice President John Roach about technical aspects of the electronics business. Roach had been instrumental in convincing Charles Tandy to venture into the computer market—a move which kept Radio Shack profitable in the late 1970s despite a declining citizens-band radio market. After Tandy's death Roach became executive vice president of the electronics chain. In 1980 he replaced North as chief executive officer and in 1982 became chairman of the board.

As head of Tandy Roach continued his investment in the computer industry, but by 1984 the company's one-time 19 percent market share had dropped to only 9 percent. One problem was that Tandy computers used only Radio Shack software, limiting users at a time when IBM and Apple were flooding the market with new software. Furthermore, when the computer market declined and VCR sales exploded in the mid-1980s, Radio Shack had an insufficient inventory on hand and lost out. To put pressure on IBM, Tandy changed its philosophy and introduced two new IBM-compatible computers. Like its main competitor, Tandy started labeling its computers with the "Tandy" name instead of the "TRS" insignia it had been utilizing, and began underselling IBM. Roach also upscaled the Radio Shack image by improving store design and set up specialized Radio Shack "Computer Centers," which lured customers into a web of support and service. In the rapidly changing environment of the personal computer industry, Tandy put large amounts of money into research and development to stay on the cutting edge and in 1988 acquired Silicon Valley's lap-top computer maker, Grid Systems Corporation. The company also expanded its commitment to consumer electronics by manufacturing and selling its own cellular phone equipment and initiating research on an erasable and recordable compact disk.

Other deviations from Charles Tandy's philosophy followed with the acquisition in 1985 of 290 electronic equipment chain stores known as Scott-McDuff and VideoConcepts. As part of the Tandy Brand Name Retail Group, these stores followed Radio Shack policy and did not sell exclusively private brands. Tandy Marketing companies in the 1990s distributed Memtek Products such as Memorex audio and video tapes and distributed both Tandy products and similar products in many stores. Tandy Corporation also sold personal computers in outlets other than Radio Shack. In 1985 the company expanded to universities and military installations, and in 1988 Tandy computers were test-marketed in Wal-Mart stores. Additional agreements with other corporations included a joint computer development program with Digital Equipment and the sale of Tandy computers to Panasonic for resale with a Panasonic label. Tandy also contracted with the Japanese firm Matsushita to supply personal computers that the Japanese could then sell in the American market under their own name. Some dealers, believing these alternative strategies threatened company competitiveness, formed the Radio Shack Dealers Association in 1988 and considered a class-action suit against Tandy. In the 1990s Tandy employed 37,500 workers and had sales of $4.3 billion. Early in 1993 the company announced it would split its retailing and manufacturing concerns and consolidate and spin off its electronics and computer-manufacturing units as a separate company. It also chose to sell 100 of its 413 VideoConcepts and McDuff stores and planned to open five Incredible Universe megastores and add new Computer City locations. By late 1993 the company reported second quarter losses of almost $78 million but remained committed to Radio Shack stores as its base, along with diversified distribution channels and new levels of corporate production. Company spin-offs include Pier 1 Imports, acquired from Tandy in 1968 in a management-led buyout; TandyCrafts, established in 1975; and Color Tile, Inc., established in 1979. In the 1990s the four principal subsidiaries of the firm were Tandy Credit Corp.; O'Sullivan Industries, a manufacturing subsidiary; Tandy Electronics; and A & A International. Of Tandy's thirty-four manufacturing plants, twenty-eight were located in the United States. Around 2000 the name Tandy was dropped, and it became RadioShack Corporation.

BIBLIOGRAPHY:

The International Directory of Company Histories (Chicago: St. James Press, 1988–). Oliver Knight, Fort Worth, Outpost on the Trinity (Norman: University of Oklahoma Press, 1953). Milton Moskowitz, Robert Levering, and Michael Katz, Everybody's Business (New York: Doubleday, 1990). Vertical Files, Dolph Briscoe Center for American History, University of Texas at Austin.

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